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Relations between Asia's two biggest economies have faltered badly, hitting their lowest point in decades on Tuesday when China marked the highly charged anniversary of Japan's 1931 occupation of its giant neighbor.

Tensions had run high on land and at sea, with four days of major protests in cities across China and Japanese and Chinese boats stalking each other in waters around a group of East China Sea islands at the centre of the dispute, known by Japan as the Senkaku and by China as the Diaoyu.

"It seems the protests in front of our embassy have subsided," the Japanese embassy in Beijing, the focal point of protests, said in an email to Japanese citizens.

The embassy cited a message from the Beijing public security bureau saying "the authorities ask for cooperation that there be no protests in the embassy district". Beijing's public security bureau was not immediately available for comment.

Outside the embassy, police moved on a lone protester who had been shouting "Defeat small Japan" early on Wednesday.

Japanese businesses shut hundreds of stores and factories across China, some sending workers back to Japan in fear the protests would get out of hand. Japan's Beijing embassy had been under siege by protesters throwing water bottles, waving Chinese flags and chanting slogans evoking Japan's occupation.

To prevent a repeat of those protests, large numbers of riot police were deployed around the embassy and Beijing's subway operator closed the station nearest to the Japanese mission.

BITTER MEMORIES

On Tuesday, about 50 Chinese protesters surrounded and damaged a car carrying the U.S. ambassador to China, Gary Locke, U.S. embassy spokesman Nolan Barkhouse said. Locke was not hurt.

"Embassy officials have registered their concern about yesterday's incident with the Chinese ministry of foreign affairs and urged the Chinese government to do everything possible to protect American facilities and personnel," Barkhouse said.

Rowdy protests sprang up on the same day in other major cities including Shanghai, raising the risk they could get out of hand and backfire on Beijing, which had given its tacit approval through state media. One Hong Kong newspaper said some protesters in the southern city of Shenzhen had been detained for calling for democracy and human rights.

Tuesday was especially significant as China marked the day Japan began its 1931 occupation of parts of the mainland.

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